Refinancing with Earnest
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Both federal and private student loans typically include a postgraduate grace period that allows you six months before entering repayment.
But not all federal loan protections are available from private lenders. From reducing or pausing your payments to opportunities for repayment assistance, federal loans generally feature more safeguards.
So before you prioritize a bank over the federal government — whether you’re in school or are considering refinancing your federal loans — don’t forget about what you might be missing out.
Here are four safety nets with federal loans, as well as the next best alternative offered by private lenders.
1. Reduce your payment with income-driven repayment
2. Postpone payments via mandatory forbearance
3. Receive subsidized interest during deferments
4. Qualify for loan forgiveness
Think twice before replacing your federal loan protections
The U.S. Department of Education allows you to change your initial 10-year, standard repayment plan at any point. Most commonly, you could elect to choose an income-driven repayment (IDR) plan that caps your monthly payments at a percentage of your income and family size.
IDR plans could be a lifesaver if you prefer prolonging your repayment — and accepting the accruing interest — in exchange for a lower monthly payment. You could qualify for a payment as low as $0.
If you get your finances back on track, you could always switch plans again or make extra (large) monthly payments to shorten your repayment.
Next-best alternative: Slow repayment via economic hardship forbearance
Private lenders offer a wide variety of repayment terms before signing your loan agreement. Earnest, for example, allows borrowers to choose from any month interval between five and 20 years, making for 180 possibilities.
Once your loan is disbursed, however, your repayment plan might as well be carved in stone. Most lenders won’t allow you to change your repayment term, though you could slow your repayment via economic hardship forbearance (or make extra payments to reach the finish line faster).
The Rhode Island Student Loan Authority is a rare example of a nonfederal lender that offers a form of IDR for in-school and refinanced loans. Refinancing company SoFi also offers a modified version of IDR, but only for borrowers experiencing hardship.
Given the one-size-fits-all nature of federal loans, the rules are often black and white for every borrower. To pause your repayment, for example, the education department lays out:
- 8 scenarios (including being enrolled in graduate school) in which you could defer your loan repayment for up to 3 years
- 4 reasons (including unemployment) for which you could request a general forbearance of up to 12 months at a time
- 6 cases (including being in a medical residency program) in which you would qualify for a mandatory forbearance of up to 12 months at a time
Each measure would require filing an application (and, potentially, supporting documentation) with your loan servicer. But because the eligibility criteria are spelled out, you shouldn’t have to wonder whether your request for postponement will be approved or denied.
Next-best alternative: Apply for economic hardship forbearance
Many lenders offer a bevy of in-school repayment options, including full deferment. Unfortunately, they’re not so flexible once you leave campus.
Instead of the chance to change repayment plans, private lenders often offer more limited forms of deferment and forbearance, particularly in cases of economic hardship. Ideally, you’ll talk to your (prospective) lender about its support programs before you need them.
Borrowers who demonstrate financial need — perhaps they have an Expected Family Contribution near zero — qualify for direct subsidized loans. They’re subsidized in the sense that the education department covers the interest when you’re enrolled or in a grace period or deferment.
Say you borrow $5,500 for your junior year and are due to repay it with a 5.05% interest rate. If the loan is subsidized, you’d see the same balance after graduating and upon the conclusion of your grace period. If it were unsubsidized, on the other hand, you would be looking at an outstanding balance of $6,194 once you entered repayment, according to our loan deferment calculator.
Next-best alternative: Make fixed or interest-only payments for a set period
There are no subsidized loans among private lenders. Walk into any bank or credit union with that expectation, and you’ll walk away disappointed.
The second-best option is to make small, voluntary payments toward your debt before you enter repayment. College Ave Student Loans, for example, offers multiple in-school repayment options, including $25 or interest-only monthly payments.
Even these smaller payments could go a long way. Say you want to make interest-only payments on the unsubsidized version of that $5,500 debt mentioned above. By sending $23.15 a month to your loan servicer, you could stop your balance from growing.
There are many ways to receive partial or full cancellation of your federal student loans. Teachers working in low-income schools and public and nonprofit employees could have their remaining balance forgiven after serving in their fields for a set period. Also, borrowers in a dozen professions could have their Perkins loans wiped away after meeting specified criteria.
You could have your loans similarly discharged for several other reasons, including:
- When your school shutters while you’re enrolled
- If your school defrauds you
- During a bankruptcy proceeding
- After suffering a total and permanent disability (or death)
Next-best alternative: Forgiveness from your state or employer
Although the education department has frustrated many borrowers by denying or stalling acceptance on forgiveness applications of many kinds, at least their forgiveness programs exist.
Beyond nominal rate reductions for enrolling in autopay, private lenders don’t contribute or cancel your monthly payments — except in the case of the borrower’s disability or death.
That’s not to say you couldn’t find loan repayment assistance programs elsewhere. Look to your state government’s education agency or your employer, which might offer forgiveness or payment matching for both your federal and private loans.
Federal direct loan consolidation — the act of grouping your old loans into one new loan — isn’t a protection as much as it is an added feature.
But student loan refinancing, which — ideally — allows you to consolidate your federal and private loans at a lower interest rate, could strip all your federal loans’ safeguards.
So before refinancing your old debt — or borrowing private loans for your next semester — keep in mind what you’d be losing from the federal government. Unless the next-best alternative offered by a private lender is good enough, you might be wise to stick with Uncle Sam.
Interested in refinancing student loans?Here are the top 8 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Figure.
Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
5 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
6 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 12/07/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
8 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 12/1/2019. Variable interest rates may increase after consummation.
|1.99% – 6.89%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|1.99% – 6.75%3||Undergrad & Graduate|
|1.99% – 6.65%4||Undergrad & Graduate|
|2.43% – 7.60%5||Undergrad & Graduate|
|1.85% – 6.13%6||Undergrad & Graduate|
|1.90% – 8.59%7||Undergrad & Graduate|
|2.74% – 6.25%8||Undergrad & Graduate|